Factors influencing the UK property market

Saturday, July 21, 2018

It could be a better year in Britain’s dysfunctional housing market for first-time buyers and tenants. Take a look at the thoughts and predictions published in The Guardian about how the property market will look for the rest of 2018.

1. Interest rates will stay low

With the economy weak, the market does not expect any further hikes across the year. Mortgages will remain cheap although, with inflation outpacing wage rises, will still very much feel like a burden.

2. Housebuilding will rise

New home building has picked up with 217,000 homes coming on to the market in 2016-17, up 20% on the year before. But that only brings the total back to levels seen before the financial crash, and a long way short of the 300,000 target set by the government. If “Brexodus” migration numbers continue to fall and construction activity picks up further, the supply side of the housing equation will be less pressing than in previous years.

3. Landlords will lose out to first-time buyers

First-time buyers should be in the ascendant in 2018, with lending for buy-to-let in retreat. As recently as 2015 landlords snapped up 120,000 houses using buy-to-let finance, but the Council of Mortgage Lenders expects this to fall below 80,000 in 2018. Rising taxes and tougher lending criteria are slowly tipping the balance in favour of homebuyers rather than property speculators.

4. Stamp duty cut and help to buy will continue propping up developers

Philip Hammond abolished stamp duty for all properties up to £300,000 bought by first-time buyers with immediate effect in the budget. The move will save four out of five first-time buyers up to £5,000. But the Office for Budget Responsibility predicts that it will raise prices by 0.3%, with the increase coming in 2018. Meanwhile, the help-to-buy scheme has been given another £10bn boost, providing financing until 2021, although critics say it has been squandered in chasing up the price of new-builds.

5. Tenants may find some relief

After years of galloping rent increases, landlords are finding they can’t squeeze tenants any further. Average UK rents rose by less than 1% in 2017, and fell in London. With salaries under pressure from inflation, few expect real rent increases in 2018. Tenants will applaud the new ban on letting agency fees.

Article taken in part from www.theguardian.com

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